Essential Tips For First-Time Property Investors
Investing in property can be an effective hedge against inflation and a good way of generating long-term income, but it's far from a free money machine. Many people who invest in property with the plan of renting it out overlook how challenging being a landlord can be.
Learn the Rules for Rentals in Your Area
If you're planning to become a landlord, make sure you're familiar with all of the rules and regulations that landlords are expected to abide by. Landlords must follow anti-discrimination laws and keep the property livable, for example. In addition, there are processes that must be followed before a tenant can be evicted. Familiarize yourself with these rules and make sure you understand their implications before committing yourself to a mortgage for a rental property.
Also remember that, as a new business owner, you’ll need to legally register your business with the authorities. This entails choosing the right type of business entity for you, whether that be a sole proprietorship, corporation or limited liability company (LLC). Many entrepreneurs go the LLC route due to tax advantages and the protection of personal assets. If you’re wondering how to start an LLC in Colorado, you can use an affordable and reputable online formation service, an option that saves you time—and possibly money—when it comes to filing all the paperwork.
Secure the Property Before Renting It Out
Before you rent out a property, make sure that it's secured. One particular item many landlords might forget to take care of is locks. Not only should all doors have high-quality locks, but they should be installed by a professional locksmith. When you're looking for a locksmith in your area on the web, keep an eye out for locksmiths with high customer ratings to ensure a stress-free experience. In addition, you'll also want to make sure that they are properly insured and bonded. Finally, make sure that they offer a warranty for any work they do on your property.
Consider Using a Property Management Company
If you have more than one property to look after, you may find it difficult to keep up with maintenance, setting rents, and vetting tenants. Even if you have just one property, you may want to use a management company to take care of it so that there's a professional "buffer" between you and the tenants. Property managers can help you set the right rent prices and avoid some of the challenges associated with finding high-quality tenants, saving you time and stress.
Do Your Due Diligence
Property prices in and around Denver can vary dramatically, and it's important to have a good understanding of the area and the type of tenants different properties might attract so you can be confident you'll be able to find good tenants. For example, studios aimed at young professionals are more likely to be appealing if they're close to offices while family properties will need to be in an area with quality schools.
Consider a Duplex or Other Multifamily Property
Buying a duplex to rent out can be a reasonable first investment because they're relatively low risk and can offer greater potential profit than a single-family residence. Some early career landlords purchase a duplex so they can live in one part and rent out the other, but this comes with some downsides if the tenants you have next door are difficult to deal with.
Another practical option is to find a property to fix up and then rent out. If you have the time and enjoy DIY, this could save you a lot of money and provide a good long-term revenue stream compared to flipping fixer-upper properties.
Being a Landlord Can Be a Challenge
Buying and managing your first investment property takes research and planning. Make sure the property is secure and in a good state of repair, do your due diligence, and consider a multifamily property as a low-risk option. Working with an experienced property management company like our sister branch BRC Multifamily Management could also increase your chances of success as a landlord. Call (303) 495-2212 to learn more!
article submitted by:Kristin Louis of parentingwithkris.com
